PHILADELPHIA INQUIRER
Marcellus rush echoes history of recklessness
Pa. has seen plenty of destructive energy extraction.

By Susan Q. Stranahan
The natural gas industry eyed the rugged forests of northern Pennsylvania, eager to exploit their enormous potential. Descending on Harrisburg, the industry’s promoters promised a much-needed economic shot in the arm. The year was 1967.

In hindsight, the plan seems impossibly audacious: Explode a 24-kiloton atomic bomb in the thick shale beneath the Sproul State Forest near State College to create a massive cavern for storing natural gas. Known as Project Ketch, it was a partnership between the Columbia Gas System Service Corp. and the U.S. Atomic Energy Commission, which was hungry to find peaceful purposes for nuclear technology. (Another commission brainchild of the era: to nuke its way across Panama to create a second canal.)

Back then, Harrisburg had the red carpet out for any nuclear project, no matter how bizarre, and the proposal caught on. Why not put all that empty forest land to good use? Pennsylvania could cash in big, because the industry and the AEC hoped to detonate as many as 1,000 nuclear bombs to allow gas storage in the Northeast.

While the plan had the blessing of lawmakers from downstream districts along the Susquehanna, the reception wasn’t as enthusiastic upstream. Among those opposed were the residents of Renovo, which was ground zero for Project Ketch. Wouldn’t the forest be harmed? And, by the way, wouldn’t the gas in the cavern be radioactive?

The project’s backers quickly responded that the gas would meet all existing regulations. True, except for one fact: There were no regulations. As news of the plan spread, more than 25,000 Pennsylvanians signed petitions opposing it. Ultimately, the AEC and Columbia backed away from the idea, and Sproul remained nuclear-free.

How different is today’s race to exploit the rich natural gas reserves buried deep in the Marcellus Shale formation stretching across Pennsylvania, including the Sproul State Forest? Not very.

Last week, the lure of a fast buck swept across Harrisburg once again. The latest bids for drilling rights on state forest land generated twice the revenue anticipated. The response in the Capitol: Let’s cash in! There are 1.4 million more acres of forest land out there that we haven’t leased yet. (That the state didn’t have the courage to demand a tax on this vast resource is another shameful story.)

Rep. Greg Vitali (D., Delaware) voiced the warning that should be reverberating around Harrisburg when it comes to handing Penn’s Woods to energy developers. “We need to go real slow at this and not look at the parks as a cash cow,” he said. That’s true of the whole gas leasing boom, on public and private land.

So far, the gas industry has called all the shots in states with Marcellus reserves. Pennsylvania is no exception.

In the absence of tough oversight in Harrisburg, concerned citizens have been left to ask: What will this do to water supplies? (Drinking water and streams have already been contaminated.) What chemicals are you using to extract the gas? (Until recently, the industry insisted this was a trade secret. Some are known carcinogens.) What happens to all the waste water generated? (The industry now concedes a lot of it will remain underground.)

In place of answers, the gas industry has given Pennsylvanians the same mumbo jumbo that the Renovo folks heard back in 1967: We meet all regulations. Trouble is, there aren’t enough regulations. Or regulators.

If developers are willing to pay top dollar to grab this natural resource, then it’s worth holding up the race for riches to make some wise choices – choices that won’t destroy Pennsylvania and haunt future generations.

Loggers swept across the northern tier of the state more than a century ago, leaving denuded mountains and polluted waterways. Only through decades of publicly funded reforestation and careful stewardship did the magnificent wooded headwaters of the Susquehanna, Delaware, and Allegheny river basins recover.

Pennsylvania gave away the store to the coal barons, too. They gouged hillsides, destroyed drinking water supplies, contaminated thousands of miles of streams, and left a cleanup tab in the billions of dollars.

Does anybody see a pattern here?

The short-term gains of these exploitative industries have become the long-term debts of Pennsylvania’s citizens. If wiser heads don’t prevail soon, the natural gas boom will leave a similar legacy – one regretted long after the resource, and those who profited from it, are gone.

House to focus on drilling issues next year

HARRISBURG – House Democratic leaders are making taxation and regulation of natural gas drilling in the Marcellus Shale formation top priorities next year.

The effort will get started with statewide hearings by the House Environmental Resources and Energy Committee and House Democratic Policy Committee, said Majority Leader Todd Eachus, D-116, Hazleton.

A renewed push to enact a state severance tax on gas production as well as legislation to address drilling-related issues ranging from protection of water supplies to royalties for landowners is part of the legislative focus.

“We are going to take up the issue of the Marcellus Shale extraction tax,” added Eachus in a recent interview. “We really think the development of the Marcellus Shale should have a social benefit.”

Interest in the impact of drilling activities in the Marcellus formation underlying Northeastern and Central Pennsylvania built steadily this year stemming both from fiscal concerns over the large state revenue deficit and environmental concerns highlighted by the recent federal lawsuit by 15 families in Susquehanna County alleging that Cabot Oil and Gas Corp. damaged their health and property.

Earlier this year, Gov. Ed Rendell proposed a five percent severance tax modeled on the West Virginia levy while the Department of Environmental Protection hired additional gas well inspectors with revenue from a fee hike on oil and gas exploration permits.

Rendell eventually said it would be premature to implement a severance tax for fiscal 2009-10, but House Democrats rallied behind the idea and included it in their version of the budget bill. The final $27.8 billion budget is without a severance tax. This is mainly due to because of opposition from Republican lawmakers who said a tax would discourage drilling companies from creating new jobs.

Rendell thinks the timing is right to include a severance tax as part of the 2010-11 budget, said John Hanger, acting Secretary of the Department of Environmental Protection.

“The governor is open to what the details of the severance tax would be,” he added.

One unresolved issue is the distribution of severance tax revenues.

“My (bill) would devote gas revenues to both the municipality and the county where natural gas is extracted, the Liquid Fuels Fund (for local road work), as well as to LIHEAP (low-income heating), environmental stewardship and state government,” said Rep. Camille George, D-74, Houtzdale, the environmental panel chairman.

Other drilling issues await Harrisburg’s attention.

George wants action to protect the existing 12.5 percent royalty to property owners for gas production on their land. He is awaiting a decision from the state Supreme Court on whether the royalty is to be calculated after deducting post-production expenses such as processing, marketing and transportion from the producer’s proceeds.